More than 3,500 inmates in Virginia jails have been diagnosed with a serious mental illness.

"Mental Illness in Jails," a report released this month by the state's Compensation Board, showed a 17 percent increase in the number over last year.

On Friday, at the annual meeting of the Senate Finance Committee in Williamsburg, Dick Hickman, deputy staff director, played down the increase as possibly due to more refined reporting but described the numbers as significant. "They're similar to last year's numbers, but the proportion of serious mental illness has jumped," he said. He outlined the issues highlighted in the report and made recommendations for policy changes.

In all, almost one-quarter of inmates are reported to be mentally ill. Serious mental illness — defined as those with schizophrenia, bipolar or delusional disorders, and major depression — accounts for more than half of the mentally ill population in Virginia's 66 jails. Of those, 1,425 are being held in isolation in jails which do not have a mental health unit, according to the report.

Hampton Roads Regional Jail, which draws inmates from Newport News, Hampton, Norfolk and Portsmouth, has no defined mental health unit. At the time of the report's survey in July 2013, it housed 357 with mental illness, of whom more than 200 were diagnosed with serious mental illness.

The Compensation Board first conducted a survey of the issue in 2005 and has conducted in-depth annual surveys since 2009. The information is broken down according to diagnosis, medications administered, treatment available, types of violations, and costs. In 2013, jails reported a need for 2,580 additional beds to house all inmates with non-acute mental illness in mental health beds or units.

"No other state does this. We're ahead of the game in describing the problem," Hickman said. "You have to define a problem first to get your arms around it."

The solutions are more complex, he conceded. "I like the concept of providing funding for some kind of licensed mental health unit," he said. Hickman explained that without having a unit licensed by the Department of Behavioral Health and Developmental Services, jails are not able to force medication and inmates can go without treatment. That, in turn leads to recidivism.

After listening to the report, state Sen. Barbara Favola, D-Arlington, said, "I'm more convinced than ever that jail dollars at a certain level have to follow the person. Individuals who are eligible for release are being held because there are no community services available. Money should follow the client."

In response, Hickman cautioned that if it meant a sheriff losing a deputy's salary to provide those services, that would be difficult to implement.

He determined the need for the Compensation Board to follow up and determine how many mentally ill inmates are held after being eligible for release. The report cited 32 inmates being held in July more than 48 hours after a temporary detention order (TDO) to a state hospital for psychiatric commitment. In response to another question about violations committed by the 1,425 being held in isolation, Hickman responded, "Many are on suicide watch, but we also need to know more about that group."

"As a top priority the General Assembly may want to consider some study commission and make some recommendations. It's a complex area. We need to distinguish between those who can be diverted and those who cannot," he said.

• Adjusting state incentives to encourage localities to address jail mental health treatment in collaboration with community services boards; provision of licensed mental health treatment units in jail could help to reduce recidivism.